MoneyBeat: TSX Listing Loses Luster for Gold Producer Newcrest

(This story was first posted on The Wall Street Journal Online’s MoneyBeat blog at http://blogs.wsj.com/moneybeat/)

By Rhiannon Hoyle

Interest in gold may be dulling among North American investors, if Newcrest Mining Ltd.’s recent experience is anything to go by.

Wind the clock back one year and the world’s fourth-biggest gold miner was trumpeting the virtues of a North American listing, where many of its investors are based. Now, it plans to delist from the Toronto Stock Exchange after finding the benefits were outweighed by costs it can ill-afford.

Bloomberg News

Newcrest is in cost-cutting mode after swinging to a net loss of 5.78 billion Australian dollars (US$5.33 billion) in the year through June. Falling precious metal prices prompted the Melbourne-based company to take huge writedowns on assets, including a $3.24 billion impairment charge on its Lihir mine in Papua New Guinea.

Gone already is the company’s dividend, hundreds of jobs and an Australian office.

Next for the ax is the company’s secondary listing in Toronto, which it only completed in March 2012. Newcrest’s main listing is the Australian Securities Exchange, known as the ASX.

“The anticipated benefits have not been realized to date and it isn’t expected that maintaining the listing will deliver significant future value for the company,” Newcrest said. Gold prices have slumped around 20% year-to-date, breaking a decadelong bull market.

In recent years, Australian miners have headed overseas in vast numbers, targeting a bigger pool of investors than at home. In the decade to mid-2012, about 10% of ASX-listed resources companies sought a dual listing overseas, according to law firm Baker & McKenzie.

Last year’s annual report had Newcrest–which also has a listing on the Port Moresby Stock Exchange, and American Depositary Receipts in New York–giving only positive feedback from North America. Canada is home to some of the world’s biggest gold miners, including Barrick Gold Corp.

“We have a substantial investor base in North America and this listing is a cost effective way of creating better visibility and greater demand for Newcrest shares,” the miner said then. It also moved its head of investor relations Steve Warner to North America to handle the listing.

Those heady days are over, at least for now. Newcrest plans to apply to exit the TSX by the end of September.

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